BOTW: The AI effect in the real world; Downfall of a wrong 'un; Radio innovation; The Google litigation
BOTW: The AI effect in the real world; Downfall of a wrong 'un; Radio innovation; The Google litigation
Welcome to Best of the Week, written on the last day of what can reasonably described as the summer holidays.
Happy Thank A WordPress Developer Day. Truly, they’re the unsung legends.
Today’s writing soundtrack: Billy Joel - The Nylon Curtain.
Today’s topics: How AI will boost share prices and shred agency revenues; the end for Phillip Kingston’s reputation; the aborted News Corp merger; the latest at TMH.
Unmade’s first conference RE:Made - Retail Media Unmade is going to help set the agenda for the industry’s hottest sector. Colin Lewis is the international keynote, and the bosses of Coles 360 and Woolworths’ Cartology are among the speakers.
Unmade’s paying members get an extra discount - we’ll be emailing members a reminder of the coupon code shortly.
If you’re thinking of coming to RE:Made, sign up as a paying member today to access the discount, along with all our other benefits.
BuzzFeed joins the robots
I’m hesitant to return immediately to the subject of AI after last Saturday’s newsletter. I’d hate to bore you. But there’s no getting around it. Just as 2013 was the year of mobile, 2023 is the year of AI.
Thanks to OpenAI’s ChatGPT, we’re going to be talking about it all the time. Anyone working in the communications industry needs both a solid understanding, and a thoughtful point of view on the implications for their part of the business. More than that though, they need a plan.
The conversation about ChatGPT has gone mainstream. The real magic is happening a step further back, at OpenAI’s API - the generative AI system which powers the likes of ChatGPT (which created the text below) and digital image generator DALL-E (which created the image above). Anyone smart enough can lay their own software on top of the OpenAI API.
This week it was BuzzFeed’s turn to see the transformative effect of AI - this time on its share price.
Since Wednesday, the BuzzFeed share price is up by an astonishing 300%.
BuzzFeed’s price has improved from deeply troubled to merely troubled.
The digital publishing operation, which also owns the Huffington Post, had been stuck on a market capitalisation of about US$120m after a lacklustre public listing in the US a little more than a year ago.
That stacks up against a debt pile of US$150m, due in less than four years, and an annual profit of US$40m on revenues of US$400m.
BuzzFeed the company isn’t as big as the BuzzFeed the brand, which was on the leading edge of what made content go viral.
It began to pull back from Australia in 2019 and wound up its local operation in 2020, but remained a global name.
After its disappointing float, it needed a magic trick.
Two came along this week. First, the Wall Street Journal revealed that BuzzFeed had agreed a US$10m deal to generate content for Facebook’s owner Meta.
And a few hours later, Reuters revealed that BuzzFeed will use OpenAI to generate personalised content including quizzes.
Given that both details emerged close together - and neither by formal stock market announcement - it’s hard to be certain which one created the US$400m improvement in market sentiment. But a US$10m Meta deal doesn’t seem the logical explanation.
We don’t even know exactly what the Buzzfeed plan for the AI is.
Reuters quoted a staff memo from founder and CEO Jonah Peretti: "In 2023, you'll see AI inspired content move from an R&D stage to part of our core business, enhancing the quiz experience, informing our brainstorming, and personalizing our content for our audience.”
Even before the Buzzfeed news, a lightbulb came on for me during the week. The impact of OpenAI on the business world is not something which is about to happen. It’s already happening.
Any CMO who walks into a board room can expect to be asked what their AI strategy is. And they’ll need a good answer. The same goes for procurement.
Seeing the share price effect, every board will want to know when they can make their AI announcement.
Creative agencies may well have the most to lose from their bottom line within our world. All the low level production work - tweaking messages for multiple executions - will go to automation, and really, really soon. Anything which can be done by somebody with a few days’ training can now (not soon, but now) be done by generative AI.
It will also make it a lot simpler for brands to bring much of that work in house.
Some agencies will lose a third of their revenue over the next 12 months.
News Corp sails on
BuzzFeed wasn’t the only piece of news with local implications which emerged from the US this week.
The proposed merger of News Corp and Fox Corporation - the two parts of Rupert Murdoch’s empire - is off.
The original News Corp split in 2012 - into the larger 21st Century Fox which contained most of the company’s US and UK television and film assets, and a new News Corp which contained the newspaper mastheads and the stakes in Foxtel and REA Group. The reason was to get a better valuation for the organisation’s assets, and it worked.
Murdoch later sold most of 21st Century Fox to Disney in 2019. That left the US-based Fox News and Fox TV network sitting inside the new Fox Corp.
The cancelled proposal was to bring Fox Corp (currently worth US$18bn) and News Corp ($US12bn) back together.
In the scheme of things, the decision to drop the process doesn’t much matter to News Corp’s existence in Australia. Culturally the two businesses remain siblings, both run by Rupert and Lachlan Murdoch and both still similar in outlook. Increasingly Sky News Australia has moved towards the Fox News template, and hasn’t needed to be part of the same company to do that.
More interesting is that this is the first time I can recall Rupert Murdoch being thwarted by his own shareholders, who objected to the deal because they couldn’t see the value.
And the deal making continues. The company appears to be on the verge of selling its stake in US real estate operation Move - for up to $3bn, according to the Australian Financial Review.
That would raise questions about the company’s ongoing desire to be majority owner of the ASX-listed REA Group. And how it would spend the money. Network 10, anyone?
The new Google lawsuit
And a third blockbuster out of the US this week came from the courts. The US Justice Department filed an anti-trust lawsuit against Google’s programmatic shenanigans.
It covers some of the same ground as the 2021 filing by a dozen US states back in 2021, which I wrote about at the time.
But it goes harder.
As US attorney general Merrick Garland put it in a press conference: “For 15 years, Google has pursued a course of anti-competitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics to insulate itself from competition, and force advertisers and publishers to use its tool.”
The 149-page complaint explains the various ways it sees Google multi-dipping into the programmatic advertising chain. It alleges that only $35 in every $100 reaches the publishers, with Google slicing out most of the rest.
Much of it will look familiar to those who’ve been following the ACCC’s investigations into the digital advertising supply chain.
Could this be the one that finally forces the Google-Alphabet breakup? It’s the best chance yet.
Campaign of the Week: Fiji: Where happiness comes naturally
In an experiment over the next few editions (which may become permanent if readers find it useful), we’re teaming up with our friends at Little Black Book Online to highlight the most interesting marketing campaign of the week
LBB Australia reporter Delmar Terblanche writes:
We've heard a lot over the last year or two about the world "opening back up again", but in the case of Fiji, a country known for its tourism, that reopening really is a big deal. To celebrate the occasion, Host/Havas have designed a gorgeous new campaign around Fiji's classic appeal as one of the world's happiest countries. But now, instead of being about the visitors, it's about the Fijians. The campaign emphasises Fijian culture from the ground up, with a multilingual approach that celebrates the real, authentic joy of the country and its people.
You can read more from Host/Havas ECD Jon Austin about how the capaign was pout together over at LBB
Outdoor, on the radio
A hat-tip to the team on the Christian O’Connell Show for a smart promotional idea, as we enter into the first radio survey period of the year.
ARN’s Gold FM has done a deal to put live updates on digital billboards across Melbourne.
There must have been some challenging technical hurdles to overcome to do it in real time from the studio. It’s the sort of attention-getting stunt which could well improve recall for those completing listening diaries.
Groundhog Day at The Market Herald
Back in September last year, The Market Herald, owner of ASX forum Hot Copper, announced it was issuing new shares at 34c each to raise $24m to buy Gumtree, Carsguide and Autotrader.
Guess what? This week, TMH announced it was issuing new shares at 34c to raise $16m to help pay for that very same purchase.
The company has until the end of May to pay Adevinta the $60m it still owes on the deal.
The main change is that since the deal was announced, founder and CEO Jag Sanger was ousted in a battle of boardroom egos.
Going back to the market multiple times to raise funds by issuing shares is generally a harbinger of trouble. The last time I remember it happening with an ASX-listed media company was Network Ten, which eventually ended up in administration.
End of the road for Kingston’s reputation
For those who recall the rolling disaster that was Trimantium GrowthOps, don’t miss today’s Australian Financial Review.
What little remained of founder Phillip Kingston’s reputation has been shredded by Justice Jim Delaney in a case before the Supreme Court of Victoria.
The AFR piece unpicks some of Kingston’s machinations as he took TGO to a float. The company rolled together a bunch of agencies of which the biggest was Melbourne creative shop AJF.
The key quote from Justice Delaney: “I find that all of the evidence-in-chief given by Mr Kingston concerning what he said occurred on 23 November 2017 was fabricated." He added: “He was not a credible witness.”
I wrote about the GrowthOps misadventures extensively when I was at Mumbrella. Rarely have I had such a strong instinct that I was dealing with a wrong ‘un.
Time to let you enjoy your weekend. For those who took Friday off after the January 26 public holiday, you have my commiserations. Monday is going to hurt. Thank goodness Easter is early this year.
Toodlepip…
Tim Burrowes
Publisher - Unmade
tim@unmade.media